Another Manufacturing Giant Goes Under Microscope of National Labor Relations Board

Jul 22, 2011 3:20pm

ABC News' Amy Bingham reports:

Another high-profile company is coming under the scrutiny of the National Labor Relations Board after a union in California filed a complaint last week against German car manufacturer BMW.

The International Brotherhood of Teamsters Local 495 union said BMW is violating labor laws by planning not to renew the contracts of 100 workers at its Ontario, Calif., distribution warehouse and instead outsource the work to a logistics company.

The NLRB has come under fire recently for a case  involving airplane manufacturer Boeing. The NLRB said Boeing “retaliated” against unionized employees at its Washington assembly plant when it moved part of the construction for its Dreamliner 787 jet to a newly built plant in South Carolina, a state without heavy union representation.

The issue has caught the attention of Republicans in Congress, who claim the NLRB has overstepped its authority and tried to dictate private business decisions.

Read more about the NLRB here

Republicans on the House Education & the Workforce Committee passed a bill Thursday along strict party lines that would prevent the board from dictating where a private company can do business. It is not scheduled for consideration in the full House and is unlikely to pass the Democrat-controlled Senate.

Rep. Darrell Issa, R-Calif., the chairman of the House Oversight Committee, has also held a hearing to assess possible changes his committee might want to make to the board, including disbanding it altogether

Read more about the Oversight hearing here.

The California Teamsters union complaint is in the early stages and has not incited a similar outpouring of discontent from Congress, for now. The complaint is still being reviewed by the board and a hearing has  yet to be scheduled.

While it has not expanded into the national debate, the Ontario complaint is making waves throughout California.

Sen. Barbara Boxer, D-Calif., urged BMW to reconsider its decision in a letter to the company’s CEO today.  

“These men and women make a decent wage with good benefits that allow their families to contribute to the local economy and their community — community that needs these jobs and has long supported your company,” Boxer wrote.

“It is deeply disappointing that these loyal employees would be penalized at a time when your company recently reported 2011 first quarter earnings of $1.78 billion — triple that of first quarter earnings in 2010 — and first quarter sales  21 percent greater than last year,” she continued.

Kenn Sparks, a spokesman for BMW of North America, said the move is part of the company’s nationwide strategy to “focus on the core aspects of our business” and turn over all other aspects to “supporting businesses.” 

Sparks said four of BMW’s six distribution warehouses are already run by logistics companies whose sole business is “the science and art of moving things.”

“There are external companies who are better at logistics than we are,” Spark said. “Many companies make this determination.”

Sixty-five of the plant’s 100 workers belong to the union. Lennox said workers at the Ontario plant have been there an average of 27 years, and have never had a strike or other labor dispute.

“It’s a death sentence,” union treasury secretary Bob Lennox said. “They are going to lose their homes and lose everything they’ve worked for all these years. It’s just a horrific situation that’s just heartless on [BMW’s] part.”

In a letter to the CEOs of BMW in Germany and BMW of North America, Teamsters Union President James Hoffa claimed that BMW received $3.6 billion in low-interest loans as part of the 2009 auto-industry bailout.

“This is a mockery of America’s plant closing laws and an insult to the American taxpayers who bailed out your company,” Hoffa wrote.

But BMW said the loans they took out from the Federal Reserve during the financial crisis had nothing to do with bailout funds.

The loans "were at market rate or above," Sparks said. "They were not low interest. They were not secret and there was no taxpayer money involved. They have all paid back in full with interest and fees."

Lennox said in a statement, “It used to be that we feared our jobs getting outsourced to the Far East, now, in this recession, we’ve got to worry about a fat foreign company like BMW, that is enjoying its most profitable year ever, outsourcing in our own back yard.”

Sparks said BMW’s actions are justified because the contract specifies that at the end of the contract, the company must negotiate only “end of contract” issues such as severance pay, which it has every intention of doing.

“The contract is expiring and we are free to decide how to go forward after that. We aren’t ending anything,” he said. “The jobs are not going away. We are not closing the warehouse. There are going to be local jobs with local people, so there is no reason for there to be any backlash.”

This story was updated at 3:20 PM to include BMW's perspective about their 2008-2009 Federal Reserve loans.

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